Businesses welcome fuel duty U-turn

Businesses have signalled their relief after Chancellor George Osborne announced he will freeze fuel duty for the rest of the year, deferring a 3p hike which was due in August. The move, worth £500m to motorists, would be paid for by departmental savings across Whitehall, the Treasury said.

Businesses have signalled their relief after Chancellor George Osborne announced he will freeze fuel duty for the rest of the year, deferring a 3p hike which was due in August.

The move, worth £500m to motorists, would be paid for by departmental savings across Whitehall, the Treasury said.

Mr Osborne said: "We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world."

The announcement came hours after Shadow Chancellor Ed Balls urged the government to use a £500m underspend from the Olympics to fund scrapping the increase, which will now be applied in January, 2013.

Mr Balls said: "Labour called for this help for families and businesses this morning and I welcome the fact the Chancellor backed down this afternoon."

Richard Whiting is chief executive of Cheshire-based agricultural distribution business NWF Group, the UK's third largest fuel distributor.

He said: "Over the last few months we have seen diesel at a record high and our customers have been taking smaller deliveries as infrequently as possible.

"We have had to reduce our fleet as a result.

"The key thing for our commercial customers is that they want stability so they can plan more effectively. The impact of this move is clearly going to be positive." Denis Wormwell, chief executive of Wigan-based hotel and holiday operator Shearings Group, concurred: "This is a positive move by the Chancellor.

"Fuel is a major input cost in our coach holiday business, so any measures that help reduce inflation will enable us to preserve low prices for customers.

"This is particularly important given the financial pressures that a lot of households are under, which continues to harm consumer confidence." James Hookham, the Freight Transport Association's policy director, said: "The Chancellor's decision is absolutely right for the economy and removes that extra cost for commercial vehicle operators that would have hit them hard this summer.

"The Chancellor now sees the merits of using fuel duty cuts to stimulate growth by keeping cash within businesses."

Christian Spence, research manager at Greater Manchester Chamber of Commerce, said: "This will bring an additional level of certainty to many businesses as they plan ahead at a time when margins are under constant pressure.

"Global oil prices are currently easing and we’re seeing small reductions in the price of fuel at the pumps, but it is good that the government seem keen to lift at least some pressure from both businesses and consumers." Phil McCabe, senior policy adviser at the Forum of Private Business, said: "This is probably the best news that business owners have had all year.

"Lets hope that it is the start of a growth platform with policies to help firms recruit and grow, including tax incentives." Federation of Small Businesses chairman John Walker said the rise would have damaged small companies which were "being crippled by the high cost of petrol".

He added: "We would urge the government to now put a fuel duty stabiliser in place to remove the volatility of fuel prices and help small businesses plan ahead."

RAC Foundation director Professor Stephen Glaister said: "Given that tax makes up around 60 per cent of the pump price, falls in the price of oil were only ever going to go so far in easing the financial burden on motorists.

"Road transport powers the nation's economy." AA president Edmund King said: "What we now need more than ever is fuel price transparency to make absolutely sure these benefits are passed on to drivers in their entirety."

He added: "By freezing duty and implementing fuel price transparency, the government would help all road users and kick-start the economy."